China: Ferro chrome prices remained stable w-o-w on raw material support

• Prices underpinned by strong raw material costs
• Stainless steel market remains weak ahead of holiday

Ferro chrome prices remained largely stable for high-grade material, while other grades saw modest gains this week. High-carbon ferro chrome (Cr 50%, C 6-8%) was assessed at RMB 8,590-9,000/t ($1,243-1,302/t) exw, including taxes. Medium-carbon (Cr 60%, C 1%) inched up by RMB 100/t ($14/t) to RMB 13,100-13,300/t ($1,896-1,925/t), and low-carbon (Cr 60%, C 0.1%) gained RMB 100/t ($14/t) to RMB 13,800-14,100/t ($1,996-2,040/t), all exw and inclusive of taxes.

The market remained stable, supported by rising raw material costs and winter stockpiling, while limited end-user demand kept stainless steel market activity cautious ahead of the holiday season.

Market updates

Raw material trends

The chromium ore market remained stable this week, with a slight upward trend. Spot prices edged higher, while forward prices stayed firm. Overseas mines kept offers steady, and suppliers showed little willingness to lower prices. Although port inventories were high, supply pressure eased slightly.

Winter stockpiling by ferro chrome plants boosted demand, increasing traders inventory costs and firming up quotations. Rising raw material costs drive up production expenses, with smelting costs in Inner Mongolia reaching high levels. This supported ferro chrome prices while squeezing profit margins for smelting companies.

Downstream trends

The stainless steel market remained weak and crude steel production in February declined significantly m-o-m, as steel mills carried out production cuts and maintenance ahead of holidays. This led to a notable reduction in demand for raw materials. Spot prices fluctuated, and inventories increased slightly, while limited end-user orders prompted steel mills to adopt a cautious purchasing approach, focusing on immediate needs.

Despite the slowdown, the market expected the traditional peak season in March and April, with some steel mills already securing raw material orders. The holiday period encouraged a wait-and-see approach among downstream buyers, slowing overall buying activity.

Outlook

The ferro chrome market is expected to remain stable in the near term. Higher raw material costs will continue to provide cost support, while weak procurement from stainless steel mills may limit price gains.

(With inputs from CBC)